This is an edited version of the presentation I did at the NY Games Conference. It is a discussion piece on the top trends in gaming that I'm observing for the coming year. This includes remarks on Smartphones, prepaid game cards, F2P, and Trading Card Games.

1. Games Industry Outlook
NY Games Conference
September 30, 2009

2. Good Morning
J oost
SuperData Research, Inc. 2009

3. Top 5 Trends in Gaming
I. Smartphones
II. Digital Distribution
III. Trading Card Games
IV. Prepaid Game Cards
V. Growing Free2Play Market
SuperData Research, Inc. 2009

4. I. Rise of the Smartphones
A ‘market within a market,’ expected to grow ~4 times
faster than the overall handset industry
WW Handset Shipments (% of units)
70.0
As annual shipments
52.5 for Low End and Mid-
Tier handsets are
35.0 declining, shipments
for Smartphones
expected to reach
17.5 almost 300MM units
by 2010E
0
2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
Low End Mid-tier Smartphones
SuperData Research, Inc. 2009

5. II. Digital Distribution Marches On
Different Technology, Different Consumer Behavior
Monthly Sales as % of Annual
30.0
Shift toward digital
distribution reduces
seasonality, attracts 22.5
consumers outside of
traditional holiday season 15.0
Decreased dependence 7.5
on “once-a-year casual
shoppers” 0
J F M A M J J A S O N D
Games Software
Overall Software
SuperData Research, Inc. 2009

6. II. Digital Distribution Marches On
As consoles step up online offerings, digital distribution of
video game grows from 19% in 2008 to 23% for 2009E
U.S. Video Games Sales: 1999 - 2009E
15.00
11.25 Worldwide digitally
downloaded game
7.50 sales expected to
reach $10.8 billion by
3.75
2012
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E
Physical Games Sales
Digital Games Sales
% of Video Games Sold Online
SuperData Research, Inc. 2009

7. III. Trading Card Games
TCGs are very compatible with Internet-based play,
without surrendering any portability
Online Game Play
Offline Social Play
SuperData Research, Inc. 2009

8. III. Trading Card Games
This sleeping giant has a loyal following, strong licenses
and capable of a smooth transition into digital age
Japan
23%
U.S. Total TCG market
40% estimated at $2.2
billion worldwide
Europe
37%
mil $ 2002 2003 2004 2005 2006 2007 2008 2009E
U.S. Retail Sales 750 850 700 475 550 600 800 845
SuperData Research, Inc. 2009

9. III. Trading Card Games
TCGs are a natural extension for F2P, especially those
with a strong brand or license
Free Realms (SOE) Club Penguin (Disney) MapleStory (Nexon)
World of Warcraft (Blizzard Ent.) Pokémon (Nintendo) Yu-Gi-Oh! (Konami Digital)
SuperData Research, Inc. 2009

10. IV. Prepaid Game Cards
Rising popularity of online game play has also spurred
growth in prepaid game sector
Traditionally cheaper
than using credit cards
Gives younger
audiences controlled
access
Infrastructure already
in place
SuperData Research, Inc. 2009

11. V. Growing Free2Play Market
Emerging markets show growing appetite for F2P and
offer advantages that developed market do not
Growth %
Emerging Market
Jan-April ‘09
Turkey 158.4% In emerging markets, most
Brazil 100.0% players play at PC Cafés,
Taiwan 78.4% and do not want to buy and
Sri Lanka 72.0% download a game to a
Philippines 69.8% machine they don’t own
Russian Federation 63.6%
South Africa 51.6%
Limited competition from
China 46.8%
consoles in these markets
Vietnam 37.5%
India 34.4%
Average Growth 71.2%
SuperData Research, Inc. 2009

12. Conclusion
Smartphones: Growing market, but not infinite
Digital Distribution: Exchange seasonality for economic
vulnerability
Trading Card Games: Great ancillary venue for cool IP
Prepaid Game Cards: Expanding addressable market by
lowering boundaries for financial transactions
Growing Free2Play Market: Great model to penetrate
emerging markets
SuperData Research, Inc. 2009

13. Thanks
joost@superdataresearch.com
SuperData Research, Inc. 2009

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SuperData Research, Inc. 2009